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Ahead of the Curve
Henry Canaday
Welcome to Sales 2.0, the new kid on the sales block -- destined to align sales and marketing better while speeding up the sales process. This far-ranging and quickly expanding group of technologies will affect all aspects of sales, especially the functions related to compensation and leads.What is likely to shift immediately? The structure and deployment of the sales force andcompensation, including both cash and noncash incentives. Although some experts see uncertainties related to these changes, they report that some firms are already seeing shifts in incentive practices, lead gathering, qualification of leads, and much more.According to Jerry Colletti, managing partner of Colletti-Fiss, one impact of Sales 2.0 should be more qualified leads, thus increasing a rep's ability to make quota faster and earn more money under existing comp plans. Colletti says, "It might also cut 10, 30, or even 50 percent of the time reps spend qualifying leads." Now that's useful technology.CHANGING THE STRUCTUREThat should mean higher sales and larger commissions. But managers must make sure their companies are making money if reps are being paid more. "Theoretically, you can eventually increase quota if it is easier to make old quotas," Colletti says. "And remember, you will have to pay for Sales 2.0 tools; this stuff is not free." But he cautions that increases in quota should not be immediate, or reps may grumble about the quality of leads. "It might take a couple of years to see the benefits, so don't increase quota at first, or [reps] will turn the cannon around and complain about lousy leads."Automation of lead qualification may also affect compensation and incentives. "You don't have to give personal incentives to software," Colletti jokes. On the other hand, Sales 2.0 promises to measure the effects of individual marketing campaigns so marketers can be more responsible for performance.Sales 2.0 metrics should also show where the best leads come from, whether from the Web, trade shows, or other sources. That will enable managers to assess the quantity and quality of leads they distribute to each rep. And compensation plans could reflect these assessments. Or management may simply adjust territory or segment assignments, as they will better understand how potentially rich each market is. That will also affect compensation, especially upside potential for bonuses. DOING THE BESTBarry Trailer, a partner with CSO Insights, notes that many east coast sales departments still tend to think in terms of incremental expansion of high-tech sales tools. They do not necessarily call this expansion Sales 2.0. "We call it CRM 2.0, but you can think of it as best practices -- doing what the best reps always did but doing it better, faster, and cheaper," says Trailer. Whatever they are called, the new tools enable reps to start the sales cycle earlier and accelerate nurturing very affordably.The link between new methods and sales compensation is straightforward. So incentives must reflect the changes in activity that management wants to encourage.Sales 2.0 means that reps will use new tools to conduct new activities. Noncash incentives might be used to reward reps for learning new technologies quickly and completely. Cash incentives may then be based partly on new metrics, for example, quickly pouncing on ready-to-sell opportunities as they are passed from automatic lead-distribution tools. All this may be easier than expected. A lot of young sales reps are tech savvy and eager to exploit the new lead-management tools. "But managers are used to Sales 1.0," Trailer notes. These managers must learn when to use incentives to promote change and when expectations or the system itself must be changed. "[Managers] must not mistake a training problem for a reward problem."HIGH AND LOWSales compensation is clearly changing. In the latest CSO Insights survey, reps with quotas below $500,000 increased sales from 18 percent to 21 percent, while reps with quotas of more than $4 million increased sales from 12 percent to 19 percent. "Both the very low and high ends increased," Trailer notes. Technology may be pushing quotas up for the best-compensated reps, while the recession cuts quotas for the less well paid. Trailer agrees with Colletti that new tools should make salespeople more effective, enabling an increase in quotas. But he cautions that many reps do not want more pay, just a certain pay level and a balanced life. The new lead tools, with their marketing metrics, should affect marketers' compensation. "You will not find a chief marketing officer today who is not under pressure to show a return on [lead] programs," Trailer observes. Marketers were measured by quantity of leads but now are measured and rewarded for opportunities, first calls, or (continued on page 2)
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